USMCA to supplant NAFTA

The new agreement that has been signed is known as United States – Mexico – Canada Agreement  (USMCA). Unlike NAFTA, this new trade agreement will be reviewed in 6 years and is scheduled for termination/renewal in 16 years in a Sunset Clause, which is expected to help the agreement keep better pace with technology advancements and developments. As of right now limited information is available on line with the full agreement to be voted on by the US congress in early 2019. Key points in the agreement are detailed below.

  • Autos – will now require 75% vs. the current 62.5% content
    • Labor – requires 40-45% of auto components be made by workers paid at least $14/hr by 2020, $16/hr by 2023 with more union rights to workers in Mexico.
  • Steel & Aluminum – Tariffs remain the same but going forward new tariffs cannot be applied against CA & MX for at least 60 days
  • Dairy – US  will be given access to Canada’s dairy market
  • Dispute resolution – 2 methods remain in place in the USMCA
    •   State to State
    •   Chapter 19.
  • Wine – will now be allowed on the shelves next to CA Wine
  • Intellectual Property Rights – copyright protection now extended in CA to 70 years after the death of the author.
  • Drugs – Biologic drugs will be protected for 10 yrs from generic competitors up from 8 years previously
  • De Minimis – Mexico $50 to $100, Canada  C$20 to C$150 ($117)

We at Edward J. Zarach & Associates are keeping a close watch on these developments of the USMCA and will continue to update information as it becomes available. If you have any questions or concerns preparing for these new regulations, we encourage you to reach out to your representative for assistance.